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Still struggling to grasp when you can claim input tax? Follow these six rules

by , 26 May 2016
Still struggling to grasp when you can claim input tax? Follow these six rulesIf you're still struggling to grasp when you can claim input tax, you're not alone.

Many VAT vendors battle.

While knowing you're not alone in your struggle might be comforting, it doesn't mean things have to remain the same.

And this is where we come in.
Today, we reveal six rules you must follow when it comes to claiming input tax so you can boost your company's cash flow legally.
******* Input Tax 101 *******
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
  • Your books and records comply with the requirements of Section 55 of the VAT Act;
  • You didn't claim on exempt supplies;
  • Any of your claims were for non-taxable supplies;
  • You apportioned inputs correctly and at the right tax rate (Sections 16, 17 and 20 of the VAT Act);
  • And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.


You won't go wrong with your input tax claims if you follow these six rules

Input tax rule 1: You must have a valid tax invoice for the transaction or a bill of entry for an import.
With SARS, proof is everything. If you can't back up your claims with the right documents, SARS will deny them.
Input tax rule 2: You can claim input tax on any item or expense you use in the course of your VAT-registered business. This means your supplier must have charged VAT on the transaction.
Input tax rule 3: You can claim input tax on second-hand goods you buy for your business – this is notional input tax.
To ensure SARS approves your claim, keep a record of the details of the person who sold the goods to you, a description of the goods and the amount you paid for them.
Here, you must use the VAT264 declaration form instead of a tax invoice.
****** BREAKING NEWS ******
SARS introduces more changes to the VAT return
Are you 100% sure you've covered all your bases?
All it takes is putting a zero in the wrong place on your VAT return to get in trouble with SARS – and even trigger an audit!
Don't let this happen to you!
Avoid simple yet costly mistakes with this number one resource no business should be without!
Input tax rule 4: You can't claim input tax on certain expenses and purchases.

These are:
  • Expenses that relate to entertainment (unless away on business);
  • The purchase of a motor car (unless you're a dealer);
  • Social and sports club subscriptions;
  • Expenses that relate to exempt supplies; and
  • Private or personal expenses like, repairs to your wife and children's cars, holiday's airfares, computers for private use etc.
Input tax rule 5: If you only render zero-rated supplies, (for example, you sell fresh fruit and vegetables) you can claim input tax on your business expenses.
Some of the business expenses you can claim on include rent, telephone and electricity.
Input tax rule 6: You can claim input tax on invoices you forgot about.
If, for example, you discover you haven't claimed VAT back on some back invoices, you can make your claim, but it must be within five years of the date of the invoice.
We hope knowing these rules will make it a little easier for you to grasp when you can claim input tax so you can boost your company's cash flow in a legal manner.
P.S.  Introducing the Input Tax 101 eReport. At last! Be 100% sure you've claimed every input tax credit available to you! Find out more here…

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